$121M worth of Ethereum L2s at risk as a single multisig wallet gets hacked

A crypto wallet that has permissions from 12 different blockchain networks could potentially lead to losses of up to $121 million if compromised, according to data shared by L2Beat researcher Luca Donno. The networks, including Zora, Aevo, Hypr, Orderly, Ancient8, Lyra, Mode, Pgn, Parallel, and Metal, were all created using the Conduit rollup creation software. However, the wallet requires three out of five signatures from the team to transact, and the private keys to these signatures are stored on hardware wallets, making it difficult to compromise. Conduit founder Andrew Huang stated that the system will be upgraded to a five out of seven multisig in the coming weeks, reducing the centralization risk. The data also reveals that multiple Conduit-based networks utilize the same wallet for tasks such as upgrading the network’s bridge. Aevo and Lyra, for example, have the potential to gain access to all funds. The total value locked across all Conduit networks is approximately $121 million, all tied to a single multisignature wallet. Critics argue that while layer 2 networks have lowered gas fees for Ethereum users, they are too centralized and do not provide a satisfactory user experience for widespread crypto adoption. Layer 2 developers, however, believe that these blockchains will become more decentralized as they progress through Ethereum founder Vitalik Buterin’s decentralization plan.